German industrial output falls unexpectedly in January

A plunge in car production drove an unexpected drop in German industrial output in January as the engine room of Europe’s largest economy, which narrowly avoided recession last year, stuttered amid trade friction and unease about Brexit.

Industrial output dropped 0.8 percent, well below market expectations for a rise of 0.5 percent, data from the Statistics Office showed.

Automobile production fell by 9.2 percent on the month, separate data from the Economy Ministry showed. It blamed special factors such as strikes at car suppliers and a switch to new brands for the weak performance.

Seasonally adjusted exports were flat month-on-month in January - compared to a forecast 0.5 percent contraction - while imports rose 1.5 percent, the data showed. That meant the trade surplus narrowed to 18.5 billion euros.

The unexpectedly weak data suggests the German economy is likely to post only meager growth in the first quarter.

Handelsblatt reported on Monday that the federal government had cut its in-house growth outlook to 0.8 percent for 2019, the second reduction in less than two months. The business daily cited a government document.

A weakening world economy, risks from escalating global trade conflicts, and political factors including Brexit and Italy’s finances were reasons for the economic slowdown the document mentioned, Handelsblatt said.